Breakfast with: Maxime Sbaihi, Eurozone Economist at Bloomberg
Maxime is an economist with a strong educational background (ESCP, MiM 2010). He has many years of working experience in the finance industry, both in Paris and London and across different institutions such as S&P, BNP, CA and Oddo & Cie. He also worked as an adviser for the French Minister for Higher Education and Research.
Q: Before anything else, I would like to thank you for joining the ESCP Europe Finance Society ‘Coffee Break’. Would you like to start by sharing an overview of your professional and academic background?
Maxime: I have been working for nearly 3 years as an economist at Bloomberg in London, covering the euro area. Just before, I was a junior economist at Oddo Securities in Paris. That was my first job after finishing a Masters in international economics from the Paris Dauphine University, which followed a Masters in Management from ESCP Europe completed across the Berlin, Paris and London campuses.
Q: You worked in many different companies: S&P, BNP, Credit Agricole, Oddo & Cie and finally Bloomberg. How did your roles evolve and change? How have these different steps contributed to your professional development?
Maxime: The first three company names you mention were long-term internships. They helped me to refine my career expectations and find the right job, the one allowing me to combine my passion for economics, politics and finance. It took me some time. Internships are precisely made to try until you find your place in the labour market. The companies listed have different cultures, size and origin. Working for them has taught me a lot about my strengths and weakness in a work environment.
Q: Looking at your background you had the opportunity to work with the personal staff of the Minister for Higher Education and Research and in the French embassy of Berlin.
How different was this compared to other corporate jobs?
Maxime: Following the same spirit, I wondered how the public sector looked like from the inside. I enjoyed watching the decision-making process up close and discovered all the political constraints that come with it. Working for the French Embassy’s Economic Affairs in Berlin during the first Greek crisis was an unforgettable experience too. It allowed me to discover the German economic thinking and compare it in real-time to the French one. It’s crucial to understand these cultural differences as they shape the many national reaction functions in the euro area, especially during crisis situations.
Q: Now we would like to leverage from your expertise as Eurozone Economist. Election days in four of Europe’s five largest economies are approaching in the next 12 months. You have recently mentioned “Suddenly, stars could align for the worst”, speaking about the Italian constitutional referendum. Which are the main risks for the Eurozone and for the banking system? Is the fate of Italy’s Economy at risk if Renzi’s Referendum Fails?
Maxime: The main risk for Europe now is a political one. The economy is doing better but euroskpeticism is on the rise and every vote has a Brexit potential. In 2017, there are important general elections the Netherlands, France and Germany. But, before that, the next big vote to watch is the constitutional referendum in Italy in December. Prime Minister Matteo Renzi has brought his mandate into play. Like him or not, he has given Italy some political stability and his departure would leave a dangerous void. In the worst scenario, you might end up having a political crisis on top of an economic slowdown and a banking mess that needs leadership. That’s what I meant when making this warning for the euro-area’s third largest economy.
Q: The ultra-loose monetary policies such as negative interest rates and bond-buying program have started to boost inflation. Do you think these policies were effective so far? Do you expect ECB to announce more stimulus? When do you think QE could eventually be tapered?
Maxime: The monetary policy textbooks have been rewritten since I left university. The environment has completely changed and non-conventional policies are a reaction to that change. Cutting rates isn’t enough anymore and central bankers need to reinvent their toolkit. Of course, using these new tools come with risks but doing nothing is an even bigger risk at the moment. These policies have probably been effective to tame deflationary pressures in Europe.
Our call at Bloomberg Intelligence is that the ECB will add more stimulus in December, in the form of a time extension of the QE program to allow it run beyond the current March 2017 horizon. Only after that can a tapering start being considered. It’s a matter of sequence.
Q: Draghi is constantly asking for a three-pronged approach, combining fiscal and structural reforms to accommodative monetary policies. What is your opinion on the matter?
Maxime: He has long been asking for help. The call for a three-pronged approach you are referring to was made at the IMF meetings a couple of weeks ago. It is clearly a wink to Japan’s three-arrow strategy. His point is that monetary policy alone can’t do the heavy lifting job. Factors such as demography or productivity, for example, are out of their reach of influence. Fiscal policies and structural reforms have also an important role to play here. Central bankers have been saying it for years, so far with little response from other policy-makers…
Q: Thank you very much for sharing your precious insights with us. Now we would like to ask you some personal questions if you don’t mind: Who is the person that has inspired you the most, as far as your career is concerned?
Maxime: Dany Rodrik. I like the kind of economist he is, with a constant effort made to explain the complexity of the world in simple terms. That’s precisely the challenge today in an ever more interdependent world. Its works on political economy and globalization deserve to be read.
Q: Last question, what is the most important piece of advice you can give to the ESCP students that would like to pursue a career in today’s financial services industry? What are the most important qualities to succeed?
Maxime: Curiosity and passion. A lot of people think and look the same in finance. It’s an industry that has a bad reputation but with many opportunities to change things. Find where your originality lies and make the best use of it. If you struggle to wake up in the morning to go to work, then you probably have the wrong job.
It has been a pleasure to host you at our “Coffee Break”. Thanks again for your time and patience, Mr. Sbaihi!
Global Head of Markets & AM